She said her department would work with the food and farming industries as it faced the changes.

"We will do our bit, but we can't do it alone," she said.

"The impetus must come from the industry, working within the food chain as a whole."

Hares and other species are in retreat

Mrs Beckett added that the burden on farmers must be "proportionate", before announcing talks with leaders of the food and farming industries beginning in March to decide how to proceed in the light of the report.

British farmers are deeply demoralised by the damage caused by foot-and-mouth, and by the continuing tragedy of BSE ("mad cow disease") and its human counterpart, variant Creutzfeldt-Jakob disease.

Many are suffering economically and in other ways, despite the £2bn ($2.8bn) the UK receives in direct payments under the European Union's common agricultural policy (Cap).

Consumers are increasingly concerned about the quality of much of the food produced and its indirect costs: the Environment Agency says intensive farming costs the UK £1.5bn ($2.1bn) annually in damage to air, soil and water.

Agenda for reform

And wide swathes of the countryside are now devoid of many of the species and features familiar a generation ago, including wild flowers, mammals, birds and hedgerows.

The commission's proposals were also expected to include:

paying subsidies not so much for producing crops but increasingly for conserving the countryside

increasing organic farming substantially, as more than 70% of the organic food eaten in the UK is imported

requiring farmers to have licences guaranteeing they will work the land in an environmentally friendly way before they can qualify for subsidies

encouraging them to establish co-operatives and to use farmers' markets

urging supermarkets to sell more food produced in their own localities.

The commission members recognise that only long-term Cap reform will produce the sort of farming they want to see.

But they think there is room for improvement much sooner, by invoking an EU mechanism known as modulation.

Spreading the gains

That allows member states to transfer up to 20% of Cap subsidies away from direct payments for crops and livestock, using them instead for agri-environment and rural development.

The UK is planning at the moment to modulate 4.5% of its Cap payments. The commission is likely to say this should reach 10% by 2004, as a start.

That would provide £200m ($281m), with the UK expected to provide a matching amount itself.

Farming has had a wretched few years

But Mr Gill told BBC Radio 4's Today programme: "Modulation is a system that was introduced into Britain last year.

"It does not work, robs Peter to pay Paul, costs a lot to do and in the end the industry loses money and the environment doesn't gain."

The chief executive of the Environment Agency, Baroness Barbara Young, said: "I would encourage farmers to really look at theis report closely and recognise that to some extent we've seen signs over the past couple of years of British agriculture drinking in the last chance saloon."

She added that the report presented a "real opportunity" for agriculture before suggesting that consumers were already paying more than they realised towards food production because of the Cap .